Correlation Between TIANDE CHEMICAL and Southern Copper

Can any of the company-specific risk be diversified away by investing in both TIANDE CHEMICAL and Southern Copper at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TIANDE CHEMICAL and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TIANDE CHEMICAL and Southern Copper, you can compare the effects of market volatilities on TIANDE CHEMICAL and Southern Copper and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TIANDE CHEMICAL with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIANDE CHEMICAL and Southern Copper.

Diversification Opportunities for TIANDE CHEMICAL and Southern Copper

-0.37

Correlation Coefficient

TIANDE CHEMICAL  Southern Copper

Very good diversification

The 3 months correlation between TIANDE and Southern is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TIANDE CHEMICAL and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper and TIANDE CHEMICAL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TIANDE CHEMICAL are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of TIANDE CHEMICAL i.e., TIANDE CHEMICAL and Southern Copper go up and down completely randomly.

Pair Corralation between TIANDE CHEMICAL and Southern Copper

If you would invest  7.25  in TIANDE CHEMICAL on September 23, 2024 and sell it today you would earn a total of  0.00  from holding TIANDE CHEMICAL or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

TIANDE CHEMICAL  vs.  Southern Copper

TIANDE CHEMICAL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TIANDE CHEMICAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TIANDE CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Southern Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Southern Copper is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TIANDE CHEMICAL and Southern Copper

The main advantage of trading using opposite TIANDE CHEMICAL and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIANDE CHEMICAL position performs unexpectedly, Southern Copper can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Southern Copper will offset losses from the drop in Southern Copper's long position.

The idea behind TIANDE CHEMICAL and Southern Copper pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.